A COMPARISON OF HOW DETERMINANTS OF CAPITAL STRUCTURE AFFECT LEVERAGE AND SHARE PRICE: EVIDENCE ON UK FIRMS.

Mbatia, Joy (2014) A COMPARISON OF HOW DETERMINANTS OF CAPITAL STRUCTURE AFFECT LEVERAGE AND SHARE PRICE: EVIDENCE ON UK FIRMS. [Dissertation (University of Nottingham only)] (Unpublished)

[img] PDF - Repository staff only - Requires a PDF viewer such as GSview, Xpdf or Adobe Acrobat Reader
Download (615kB)

Abstract

This study seeks to determine how various capital structure determinants affect leverage and share price from 2009-2013. I will use FTSE 350 companies and will focus on sectors such as Aerospace & Defence, Beverages, Construction & Materials, Food & Drugs retailers, Household Goods, Mobile telecommunications, Support services, Technology & Hardware Equipment and Travel & Insurance. I will test various determinants such as liquidity, profitability, size, tangibility, growth, age, non-debt tax shields and business risk.

Using correlation analysis and fixed effect regression estimation model, I established a relationship between determinants and leverage then a relationship between the determinants and share price. The relationships are then analysed and compared to each other. While Liquidity, non-debt tax shields and growth are significant on leverage under both models, Profitability and size are significant on share price.

From my findings, I would recommend a firm that wants to use equity financing to make sure it has a high profitability in order to attract shareholders. This way they will be able to sell shares at higher prices and get more capital.

Item Type: Dissertation (University of Nottingham only)
Depositing User: EP, Services
Date Deposited: 12 Nov 2014 08:54
Last Modified: 15 Sep 2016 20:56
URI: http://eprints.nottingham.ac.uk/id/eprint/27411

Actions (Archive Staff Only)

Edit View Edit View